Republican Attempts to Repeal President Biden’s New SAVE Plan Failed to Pass the Senate During a Key Vote Last Week

Millions of borrowers have already enrolled in the Saving on a Valuable Education plan, a new income-driven repayment plan program that Education Department officials are saying is the most affordable IDR plan ever. And more people are signing up.

But House and Senate GOP leaders have criticized the SAVE plan as an illegal backdoor to student loan forgiveness, given the program’s generous features and benefits.

SAVE features lower payments and student loan forgiveness benefits

Nearly 5.5 million borrowers had enrolled in SAVE as of mid-October, according to Education Department data released earlier this month. This includes nearly two million borrowers who applied for IDR for the first time, as well as hundreds of thousands of other borrowers who switched from an existing IDR plan to SAVE. Borrowers who were previously enrolled in the Revised Pay As You Earn (REPAYE) plan were automatically switched to SAVE, which is replacing that plan.

The SAVE program features a higher poverty exclusion limit, and a more affordable payment calculation formula that will result in lower monthly payments for many borrowers as compared to existing IDR options. SAVE also waives any interest accrual that exceeds a borrower’s monthly payment, ending the longstanding practice of balance increases associated with interest accrual and capitalization. 

SAVE allows for eventual student loan forgiveness after 20 years for undergraduate borrowers, or 25 years for borrowers with graduate school loans. Starting next summer, undergraduate borrowers with smaller initial starting balances can become eligible for student loan forgiveness in as little as 10 years. 

GOP fails to repeal Biden's SAVE plan

Congressional Republicans have slammed the Biden Administration for enacting the SAVE plan, arguing that it would amount to hundreds of billions of dollars in lost revenue and student loan forgiveness for those who don’t need it.

Senate Republicans last week tried to repeal the SAVE plan through the Congressional Review Act (CRA). The CRA gives Congress authority to reverse recently-enacted federal regulations through simple majorities in the House and Senate. 

“Just like Biden’s original student debt cancelation scheme, this IDR rule does not ‘forgive’ debt. It transfers the burden of $559 billion in federal student loans to the 87 percent of Americans who don’t have student loans, who chose not to go to college, or already responsibly paid off their debts,” said Senator Bill Cassidy (D-LA) in remarks on the Senate floor last week. “Where is the forgiveness for the guy who didn’t go to college but is working to pay off the loan on the truck he takes to work? What about the woman who paid off her student loans, but is now struggling to afford her mortgage? Is the administration providing them relief?”

Democrats were largely united in opposing the SAVE repeal effort. “If Senator Cassidy’s resolution is enacted, it would repeal President Biden’s plan and it would eliminate student debt relief for more than 5 million Americans who desperately need it. That would be absolutely unacceptable,” said Senator Bernie Sanders (D-VT) in floor remarks. “My Republican colleagues had no problem voting to give away over a trillion dollars in tax breaks to the top one percent and large corporations when Donald Trump was President – without paying for it… But now, my Republican colleagues want you to believe that we cannot afford to lower monthly student loan payments for working class Americans who are struggling to put a roof over her head, pay for child care, and put food on the table? Give me a break.”

Ultimately, the Senate CRA resolution failed in a vote of 49-50 in the closely-divided chamber. Senator Joe Manchin (D-WV) voted with Republicans, but that wasn’t enough to overcome Democratic opposition. 

“This shouldn’t be a partisan issue, and I’m extremely disappointed that my colleagues on the other side of the aisle chose to force hardworking Americans to foot the bill for other people’s student loans,” said Senator John Thune (R-SD) in a statement following the vote.

Had the measure passed the Senate, President Biden had promised to veto it. Administration officials argued that repealing SAVE, “would mean higher payments for student loan borrowers,” which, “would dramatically raise costs for graduates. It is exactly the wrong direction.”

Other Student loan forgiveness and relief initiatives continue, but threats remain

The Biden Administration is moving forward to implement other student loan forgiveness and relief programs. But legal threats loom.

The Education Department has already approved more than 800,000 borrowers for student loan forgiveness under the IDR Account Adjustment, a temporary initiative that gives borrowers retroactive “credit” toward student loan forgiveness under IDR and the Public Service Loan Forgiveness program. That program is ongoing, with another round of student loan forgiveness expected in the coming weeks. 

Conservative legal groups challenged the legality of the IDR Account Adjustment. A federal district court judge in Michigan dismissed that lawsuit in August. However, the challengers have appealed the decision to the Sixth Circuit Court of Appeals, where the matter is currently pending.

Meanwhile, the Biden Administration is moving forward to establish a new student loan forgiveness plan under the Higher Education Act. Officials hope that the new program will be on stronger legal footing than Biden’s initial student debt relief program that was struck down by the Supreme Court in June. However, it is widely expected that the new HEA student loan forgiveness plan will also be challenged in court when it goes live in 2024 or 2025.